2023
Spring Industry Updates
What’s New
States Prohibiting Foreign Investors
Several states have now passed “Alien Land” laws that prohibit the purchase or acquisition of title to real property by certain aliens or foreign entities. Minnesota’s statute focuses on prohibition of agricultural property, timber, forestry and mineral purposes (M.S.A. § 500.221); and North Dakota (NDCC, 47-10.1-02) and Missouri on agricultural (V.A.M.S. 442.560). There are a number of proposed bills that have been introduced in numerous other states, from Hawaii to Texas and California to Virginia. There are no proposed bills being introduced or discussed at this point in the Michigan legislature, but we will keep you updated on this issue.
Fraud Update
As you know, our industry is subject to hackers that attempt to not only gain access to our e-mails and software systems to acquire personal information about our clients/customers, but also to gain access to our entire computer network, our money and our clients’ money that is sent via wire transfer.
To minimize the risk of these fraudsters accomplishing their goals, CSS has taken numerous steps over the past several years to increase its firewalls, security, training of its employees and increase awareness among realtors, lenders and consumers. We all need to be aware of the latest risks to our businesses and customers and to share that information to allow everyone to stay well informed.
Latest Fraud Trend
Absentee Owner Transfer
The goal of this scheme is to have the title company unknowingly transfer the closing proceeds to the fraudster. The fraudster will identify the property owner and will pose as him/her and all communication will be electronic, not in person.
Red Flags:
Property has no mortgage, is a vacant lot or is a rental property or property that lists the owner’s address as a foreign country
- All dealings are via e-mail/digital means
- Seller arranges for own notary closing
- Property is listed for or seller accepts offer lower than market value and typically for cash
- Quick closing
To help combat this latest fraud scheme, CSS has instituted that a form be completed when a seller chooses its own notary (and which must located at a realty company, title company, law office or bank). The information on the form is then independently verified upon its return to the closing agent.
In addition, many Registers of Deeds–such as in Washtenaw, Wayne and Oakland counties–are now offering a free service to alert property owners when a document is recorded against their property. These are 3rd party vendors that provide the service, not the RODs directly. If your ROD does not offer this, please contact them to see when it will offer such.
How can we work together to prevent this type of fraud?
- Independently search for the identity and a recent picture of the property owner.
- Request an in-person or virtual meeting and to see their government-issued identification.
- Be vigilant for fraud when a seller agrees to accept a below market-value offer in exchange for a cash payment and/or closing quickly.
- Never permit a seller to arrange their own notary closing if possible.
- Use trusted title companies and attorneys for the exchange of closing documents and funds.
- Look out for passports and documents notarized in varying locations different from the country of residence of the seller.
- Never permit a seller to arrange their own notary closing if possible.
- Look out for funds being wired to a different country than where the seller is purported to be located.
- Pay close attention to the spelling of the seller’s name on purchase and sale contracts, passport or driver’s licenses and the email addresses used to communicate.
Market News
According to Douglas Duncan, Sr. VP, Chief Economist at Fannie Mae, it will be a bit of a rocky year compared to the past couple of years. The primary points on which he focused in a recent webinar were as follows:
- Unemployment is expected to rise as the economy enters a recession, averaging around 5.4% in Q4 of 2023 and 5.8% in 2024;
- 30-year fixed rate mortgages forecast in 2023 will be 6.3% and in 2024, 5.7%;
- Purchase originations increase from $1.279 billion in 2023 to $1.422 billion in 2024;
- Refinance mortgage originations increasing from $356 billion in 2023 to $545 billion in 2024 (Note: The origination numbers are well below 2021 and 2022, but at least appear to be moving up next year);
- Home sales could be worse than we currently expect, but better in 2024 than 2023;
- Existing home inventory remains unusually tight;
- The size of new single-family homes has started to shrink.
Legislative News
Redemption Period Change
A recently decided case changed the time period for redemption after a Sheriff’s Deed. Before the decision, the redemption period following a mortgage foreclosure by advertisement was measured from the date of the sheriff’s sale OR the date the Sheriff’s Deed was recorded IF the Sheriff’s Deed was recorded more than 20 days after the date of the sheriff’s sale, whichever was later.
On January 12, 2023, the Michigan Court of Appeals issued an opinion in Kessler v. Longview Agricultural Asset Management, LLC that changed this. The court determined that the redemption period after a mortgage foreclosure by advertisement runs from the date of the sheriff’s sale, regardless of when the Sheriff’s Deed is recorded pursuant to MCL 600.3232. This is true even if the Sheriff’s Deed is not recorded for more than 20 days after the date of the sale. The decision is now in direct contradiction to Michigan Land Title Standard 16.28. The appeal period on this decision has now passed, without an appeal being filed. This is.
